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  • Advanced Advertising Media Project Looks to Kickstart VOD Revenues

    A new research initiative aimed at measuring the impact of advertising in free VOD streams and hastening its deployment is being unveiled today. The Advanced Advertising Media Project ("AAMP") is being spearheaded by the 4A's and BlackArrow, an advertising technology provider, with participation from A&E, CBS, Comcast, Digitas, Discovery, Horizon Media, NDS, Rainbow Media and others. Last week Nick Troiano, president of BlackArrow gave me an overview of AAMP and its progress so far.

    AAMP's key objective is to discern what kinds of ads will be acceptable in VOD streams, and how these can be the basis for viable business models for content providers. While VOD has grown to approximately 7 billion views per year, with 4 billion delivered by Comcast alone, advertising has been severely under-optimized. As I recently wrote, online video advertising has lapped addressable TV advertising and then some. Whereas online video advertising has benefited from web-based standards to drive massive innovation and investment, addressable TV advertising on the other hand, including VOD, has been held back by a lack of robust infrastructure, under-investment by key players and anemic advertiser interest. Tune into VOD on any given night, and the lack of targeted ads, running repeatedly, demonstrates VOD's current lack of dynamic insertion, which is common in online video.

    As a result, there are perception issues around VOD, which undermine VOD's hopes of becoming a key revenue source, even as demand soars. As Nick explained, AAMP's first phase of research, with 20 media industry thought leaders, was meant to surface these perceptions, and establish a foundation for key VOD issues to be confronted. Results of phase 1 should be released by April 15th. Phase 2, which is underway, will bring together consumers in research labs, to better understand their behaviors and attitudes toward linear and VOD advertising. Phase 2 results are expected in mid-June. Finally, a phase 3 in-market test, will launch in late summer, with results shared later in Q3.

    Nick points out that nobody has ever undertaken this level of rigorous research into VOD advertising. He notes that the time is now right, because VOD activity, which is growing by 18% per year, has reached critical mass and monetizing it is now perceived as a critical industry issue. While BlackArrow, as a key VOD advertising vendor would clearly stand to benefit from the research, Nick notes that "it takes a village" to see VOD ultimately succeed, and that's what AAMP is all about.

    I think that's a valid point, and I've long wondered what's caused the under-investment in VOD advertising, given how much emphasis VOD in general has received from the pay-TV industry. On the flip side, online video streaming of premium content - which of course is just another form of VOD - has thrived. That, and recent initiatives like thePlatform powering Telstra's BigPond TV service, has led me to speculate that the ultimate route VOD advertising will take is for online video ad technology to be integrated by pay-TV providers as they converge on an all-IP delivery model. In this approach, pay-TV operators would evolve to using open, connected devices, instead of closed set-top boxes, to deliver web-based VOD streams, supported by dynamic ad insertion on the back end (really just an extension of what's happening online already).

    It's still too early to make any predictions about how online video advertising and VOD advertising may ultimately be joined, but Nick acknowledges that pay-TV convergence around IP is inevitable. Still, he notes that there are significant technical and operational issues around converged delivery, as well as subtleties around data ownership - depending on underlying delivery and source - that could become a hot-button issue. In this context, AAMP is an important step for helping VOD advertising gain traction as online video advertising momentum continues to surge.

    Note: At the ELEVATE: Online Video Advertising Summit on Tuesday, June 7th in NYC, we'll delve further into how VOD and online video intersect.

    What do you think? Post a comment now (no sign-in required).

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